U.S. LNG industry hopes for resolution of U.S.-China trade issues
The U.S. industry of liquefied natural gas (LNG) expressed hope that the United States and China could resolve trade issues soon, experts said.
“We want to see the trade issues resolved,” said Katherine Ehly, senior policy advisor at the Natural Gas Suppliers Association.
Chinese imports of LNG have declined since last September when a 10-percent tariff was placed by Beijing as a response to trade barriers first raised by the United States. The tariff was raised to 25 percent this month.
According to Ehly, there were “32 cargo ships with LNG to China” in 2018. “This year, it’s been three cargo ships.”
LNG is chilled natural gas that is used as fuel. Special ships are used to transport the fuel across the Pacific Ocean and keep it chilled throughout the voyage.
There are currently three terminals that produce LNG for shipment to China in the United States, Ehly said.
“Other terminals are under construction in Texas, Louisiana and Georgia,” she added.
Those terminals are expected to come online next year in the southern states, and increase export capacity to China considerably.
A recent report from the Wall Street investment bank Morgan Stanley indicated that a trade deal this year could increase the U.S. share of exports of LNG to China from 5 percent of the market to 21 percent. Other major suppliers for China’s LNG needs are Qatar, Australia and Russia.
“A higher LNG trade from the United States to China would potentially be a win-win deal for both,” analyst Andy Meng, and colleagues, at Morgan Stanley in New York City, indicated in a note on Wednesday to investors. They added that China could save 1.8 billion U.S. dollars a year in energy costs with LNG.
China is the world’s second-largest purchaser of LNG. Market expects that China will surpass Japan to become the world biggest buyer in the coming years.